How Newsflare monetizes video from over 60,000 contributors
|Simon Owens||Feb 4|
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In June 2013, the singer Rihanna held a concert in Birmingham England as part of her Diamonds world tour. During the performance, she briefly came down off the stage and began touching the hands of screaming fans in the front row. As she was walking, one of the fans lunged out and grabbed her arm, refusing to let go, and before one of Rihanna’s large bodyguards could intervene, she used her free hand to hit the fan over the head with the microphone. The entire episode was over in a matter of seconds.
That probably would have been the end of the whole ordeal, except that a woman named Diana Lahor happened to be standing a few feet away recording from her cell phone. The video quality, with its distorted audio and shaky camera, is horrible, but Lahor uploaded it to YouTube anyway with the title “RIHANNA HITS FAN-DIAMONDS WORLD TOUR BIRMINGHAM,UK.” Given the subject matter, the video immediately took off, generating millions of views.
One of those early viewers was Jon Cornwell, the CEO and co-founder of a company called Newsflare. Cornwell’s team reached out to Lahor with an enticing proposition: they would work to license her video out to media companies all around the world and give her half of whatever money they generated. Lahor not only agreed to the arrangement, but she also put Newsflare’s phone number in the video’s subscription. “We first sent it to the MailOnline,” he recalled. “They took it and the Guardian took it. And then over the next three hours, the phones rang hard from the U.S.” Everyone from Good Morning America to Wendy Williams wanted the video, and then he started receiving calls from broadcasters in Norway, Austria, and the Philippines. “I think we licensed it something like 12 times in the first 48 hours.”
That wasn’t Newsflare’s first licensed video, but it was its first “banger,” as Cornwell put it to me. In other words, it proved that Newsflare’s business model had merit, and that there was a sea of user generated content floating out on the internet that could be better monetized. Over the next several years, the company grew its staff to over 40 people and licensed tens of thousands of videos to broadcasters and brands. It’s also recently built out a media arm that’s generated billions of views across its own accounts on Facebook, YouTube, and Instagram.
Turning every smartphone owner into a news reporter
Cornwell and Bevan Thomas co-founded Newslfare in 2011, and while Thomas had some experience in the media world, Cornwell came from management consulting, with a specialty in customer analytics and retail. By that point, smartphone cameras were capable of producing fairly good videos, and mobile upload speeds had improved considerably. “The bet that we made was that the quality of the video captured by these things was going to improve, and that was going to turn the public into news video reporters,” said Cornwell. And while YouTube provided the perfect platform for uploading these videos, there was no efficient mechanism back then for getting them into the hands of media companies that would actually pay for them.
In those early days, Newsflare’s team of interns would scour the web in search of newsworthy video and then secure the rights to license it. Once they had a hot video on their hands, it was Cornwell’s job to start dialing up producers and editors at media companies. “We were often ringing up Reuters or the Sun and calling into the nearest desk and saying, ‘we've just sent a video to your email. You need to check it out. It's a good one,’” he recalled. Because he already had great content in hand, it was much easier to get the media interested in Newsflare’s offerings than if he had simply come in with a cold pitch for them to start using the platform. “Once we had them interested in a video, we would say, ‘look, would you be interested in receiving regular updates when we have a video like this?’” Cornwell would then add them to Newsflare’s “pitch lists,” which were divided among categories like extreme weather, celebrities, and disasters. Once an editor was added to a pitch list, they’d receive an automated email every time a video was added to that category.
In those early days, most of the videos Newsflare sold had already been posted to the internet, but as the company’s stature grew, users began uploading their videos directly to its platform. The users usually fell into one of three categories: chancers, chasers, and creators. The Rihanna video was an example of a “chancer” -- someone who happened to be recording video at the right place at the right time. Chasers were people who worked in fields that lend themselves to compelling video. A good example of this would be someone who gives safari park tours; they’re able to regularly capture interesting wildlife footage as they go about their work. One of Newsflare’s top-selling categories is extreme weather, and it relies heavily on a large network of professional storm chasers for that footage. The creators are those already publishing content regularly to their own social media channels, and they simply want to add an additional revenue stream to the mix.
Expanding beyond news
The original vision for Newslfare was that it would mainly service the news industry, but in late 2013 it stumbled into a lucrative new client base almost on accident. One of the videos it licensed was of a parachutist’s surprise landing in the middle of a professional football match, and in the background of the video you can clearly see a billboard for Specsavers, a British optometry chain. “We licensed it as a news clip to two or three of our major clients,” said Cornwell. “And then 10 minutes later, the phone rings. It's the marketing department for Specsavers, and they say, ‘we've seen this clip, how much for commercial use?’ And we were like, ‘well, what do you mean commercial use?’” They explained that they wanted to use the clip on their own social media accounts to promote the brand. “We said, ‘okay, we'll call you back.’ So we called everybody we knew to ask them what we should charge. Someone said, ‘oh, you should charge them £700.’ Someone else said it should be £22,000.”
As it turned out, Newsflare was about £2,000 short of its sales goal for that month. “So we went back and told them it’d cost £2,485, just to make it look like it was a calculated royalty fee. And their response was, ‘great, how do we pay?’ There was no negotiation.”The fee was still well north of what Newsflare would charge one of its broadcast clients, and the incident served as a launchpad for an entirely new revenue stream. With more and more brands creating their own social media content, there’s an ever expanding market for licensed video, and Newsflare can charge more to these brands than it does for publishers.
Over time, Newsflare’s platform became more sophisticated. In some cases, a client may want a particular kind of video that doesn’t exist yet, and it can work with the Newsflare team to create a “video brief” that prompts a certain type of video upload. For instance, a recent video brief titled “Super Bowl Sunday” encourages users to upload videos that include “fans taking to the streets and going wild after winning,” “overly emotional reactions to calls or plays,” and “footage from the stadium showing pandemic protocols.” The brief has a February 8 deadline. Cornwell explained that this is currently still a manual process, with the Newsflare team crafting the brief, but he eventually wants to make this functionality available to all clients. “They will set the parameters, they will see the pool size, and they will review the responses.”
Building Newsflare Studios
Everything I’ve described thus far fits the definition of your typical marketplace business. You have the video creators on one end and the buyers on the other, and Newsflare sits in the middle, making it easier for the two sides to facilitate transactions. But over the last few years it’s seen growing revenue and scale from an entirely different business, one that has it operating almost like a traditional media company.
Across YouTube, Facebook, and Instagram, Newsflare has over 3.5 million followers, and videos posted to them have collectively generated billions of views. For years, these channels were run as little more than a side project, but the company recently tapped Preeya Naul to build a team specifically charged with scaling Newsflare’s media arm.
Naul spent most of her career in video production, helping media companies develop content for their social media channels, but her initial role at Newsflare was on the operations side, leading the team that packages and authenticates the user-submitted videos so that they’re client ready. But given her experience growing social channels, she was the perfect internal candidate for helping scale Newsflare Studios -- the name for the company’s consumer-facing division -- and she started in the role in December.
For years, Newsflare’s channels have served as a passive revenue source, with nearly all money generated through YouTube and Facebook’s partnerships programs. Newsflare staffers would identify viral-worthy videos on the company’s platform and then strike a revenue share deal with the video owner. A good example of this strategy in action is a video uploaded in 2014 titled “Squirrel steals GoPro and carries it up a tree.” It has over 9 million views.
Naul sees her role as moving beyond one-off viral videos and developing a more cohesive strategy for all the various social platforms. “One part of that is optimizing the current Newsflare brand, largely on Facebook and YouTube,” she told me. “And the other thing we’ll look to do is add brands to that. We’ll do that by creating them, or there’s also potential for acquisitions.” She explained that she’s already on the lookout for Facebook pages with large audiences that might align with Newsflare content. “Maybe we launch a brand focused on wild animals or pets. We also get a lot of extreme weather content, so maybe there’s an opportunity there.”
If you look at Newsflare’s most recent YouTube videos, you can see this more cohesive strategy in action. Rather than publishing one-off videos from the platform’s marketplace, Naul’s team is editing together clips from dozens of thematically similar videos. For example, they posted a video titled “When winter hits” two weeks ago that compiles humorous footage of people slipping on icy surfaces. Naul told me that she only has two people on her team at the moment, but the goal over the next year is to greatly expand the head count. “We are going through a funding round at the moment, so I put together a business case to hopefully grow the team in the region of about 25 people.”
Generally, the studios team is planning out a content calendar two weeks in advance. Their output is driven, in part, around tentpole events and holidays, like National Pet Adoption Day. “Knowing what we need in advance allows us to steer the volume of supply we might need for that programming from our contributors,” said Naul. She’s also beginning to strategize around episodic content with repeatable formats, the kind that will often trigger binge watching on platforms like YouTube as users constantly click on one related video after another. Its YouTube series “What Can Go Wrong,” for instance, is already up to 11 episodes.
Naul has also been charged with leading Newsflare’s expansion onto other platforms, which not only includes social channels like TikTok and Snapchat, but also OTT platforms like Roku and Amazon Fire. For that, the episodic content will play an increasingly important role. I asked her if she planned on hiring any on-air talent to appear in front of the camera. “I don’t think we will, certainly not in the initial phase,” she said. “I think the content speaks volumes on its own. Specifically what we have is that moment that causes the reaction. You’re going to have a reaction of ‘oh my god’ or you’re driven to laughter.” Our conversation left me wondering if I would have enjoyed watching Funniest Home Videos as a kid without the narration of host Bob Saget.
It was clear during my interview with Cornwell that he’s very excited about this line of business. “It's already highly profitable as a standalone business,” he said. “We plan to take it from $1.2 million dollars now to $11 million over the next four years.” To help with this expansion, the company is raising $6 million in new investment. Part of that will go toward continuing to build out the product, but he also wants to use it to grow his sales and marketing teams in the U.S.
While no video platform can compete with YouTube in terms of sheer scale, it seemed clear to me as I browsed through Newsflare’s marketplace that, through its contributor network, the company has built out a potential goldmine of monetizable video. The key to fully unlocking that goldmine, Cornwell explained to me, involves refining the technology so that it removes all friction between creator and buyer. Right now, Newsflare’s team has to do much of the heavy lifting to get the right videos in front of publishers and brands, but he envisions a more efficient delivery mechanism, similar to the one that allows YouTube to surface the best videos to its users. “It’s about having an automated solution that provides them with relevant content at the right price so they can keep their social media channels really competitive,” he said. “That's where we see this going.”
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